This post is going to be a collection of a few random thoughts on what governments should and (maybe) should not do. This topic obviously deserves a lot more thought, but for now here is something related to a recent experience. I’m sure these bullet points could be organised into a coherent whole, but right now I don’t feel like the effort, so hopefully this works:

Here's the first thing Google spat at me when I image-searched "pomp and government"

The first time I remember seriously thinking about this topic was during my first class with Prof Sukhatme. He corrected someone in our class, who presented the familiar caricature of Adam Smith as a pseudo-anarchist who believed governments should not exist, by saying that Smith in fact saw the government to be a very important institution that should limit itself to three main tasks. First, government should make sure that the rule of law (especially with regard to property rights and contracts) should be enforced. Second, government should provide goods and services that would be under-provided by private actors, such as roads and schools. Third, the government should keep the country/economy safe from external threats.

In Prof West’s Public Finance class, our textbook Public Finance by Rosen and Gayer made the very interesting point that government support of museums, national parks, and many artistic projects was often a regressive redistribution of wealth. When such projects are funded not by direct revenue (like ticket sales) and receive government funding, it is very often the wealthy who benefit more, as they tend to use these services more frequently and in greater numbers than poorer people. Spending a year in Washington DC, which has probably the best free museums in the world, this point seemed very valid. The National Gallery of Art, Air and Space Museum, Museum of Natural History, etc. are largely populated by school children on field trips (this seems fair), tourists (who could afford a trip to DC in terms of both time and money), and rich DC residents (including college students, who tend to be wealthier than average Americans). In general, very few poor people, other than students on school trips, were visible at these places.

India recently celebrated it’s 62nd Republic Day, which is supposed to be a celebration of our constitution, but has actually become better known for the huge military parade that blocks off most of central Delhi for an entire week every year. The direct costs of this are large, as soldiers, police, dignitaries, various government officials, etc are transported to the capital and given accommodation in one of the most expensive cities in the country. There are also huge indirect costs, as security checkpoints are set up everywhere and traffic in parts of the city becomes even more insane than usual because many arterial roads are blocked, thus costing people large amounts of time. A VERY conservative estimate would be that 100,000 people (Delhi’s population is estimated at 14 million) lose half an hour of time during Republic Day week due to traffic and bulked up security. This is 50,000 person hours, or, assuming a (conservative) 9 hour working day, a bit more than 5,555 person-days of lost productivity.

Once in three years is enough

Then why do governments spend so much on these kinds of things? When I raised this topic at my office and suggested that having the parade once in three or five years (if at all) was enough, I was accused of being anti-national. So I guess part of the reason is that things like big museums and fancy parades help maintain the illusion of a “nation-state”, which is supposed to result in loyalty to the state and government. With regard to the DC museums, someone told me that it’s important for the nation’s capital to be impressive and intimidating, so I guess part of it is just a symptom of the hypermasculine, “mine is bigger than yours” construct of countries and international relations. Either way, seems like a silly way to be spending a lot of money.

Even though my perspective on many issues is through strongly left-tinged glasses, I believe that markets are generally a better mechanism for distributing most goods and services than governments. A perfect market would be even better than the market systems currently in place. Perfect markets are quite impossible in real life, and one of the reasons for this is that information is unequally distributed (internet shopping a noteworthy anomaly).

Yesterday, I went shopping with a work-friend who’s a super data/computer/technology guy. He rides a Royal Enfield Bullet and was looking for good quality gloves to keep his hands warm. We visited several street vendors selling identical products at identical prices (assuming proper bargaining procedures were completed). When we said we wanted really good quality gloves, each vendor would show us a number of items, highlighting the warmth, the material, the style, the “grip”, etc. The fourth or fifth shop we visited had the same products as all the other shops. But this guy, when we asked him to show us high quality gloves, said that he doesn’t have any. We were baffled.

“You don’t have any good quality gloves?”

“No sir, all of mine are mediocre to bad quality.”

We tried a different approach. “What about special gloves or bumper gloves?”

“No sir, all of mine are regular gloves.”

“I have never seen a shopkeeper like this before!”, exclaimed my friend.

“Yeah this guy is an idiot”, I replied as we continued our stroll through Nehru Place.

Now Nehru Place is not at all known for its clothing products. It’s a great place to buy computers, phones, and any electronic product, but the clothes here are all mediocre to bad quality. Since I didn’t go back and ask the honest salesman any follow-up question, I have chosen to believe that he was on a solo mission to perfect the Nehru Place clothing market by providing accurate information to all potential customers.